Options and pre-emption rights

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A ‘call option’ is a contractual right to require the owner of land to sell it to the option holder (ie the option holder can ‘call’ for the land).

A ‘put option’ is a contractual right for the owner of land to require another person to buy or accept a transfer of it (the option holder can choose to ‘put’ the land on the party subject to the option).

Both types of option create unilateral rights. There is no obligation on the option holder to exercise the option, but if they do so then the other party is bound to perform their part of the bargain.

Options are contracts for the sale of land within Law of Property (Miscellaneous Provisions) Act 1989, s 2 (LP(MP)A 1989). They must:

  1. •

    be in writing

  2. •

    contain or incorporate all of the terms expressly agreed between the parties, and

  3. •

    be signed by or on behalf of each party

The option holder’s notice of exercise is simply a mechanism to trigger the obligation to sell or buy the land. The option holder has a unilateral

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